Tribunal orders lawyer to pay $25,000 penalty
Diamond agency, which failed to hand over referral fee papers, says it will appeal society ruling
High-profile personal injury lawyer Jeremy Diamond is facing a reprimand from the Law Society of Upper Canada and has been ordered to pay $25,000 in costs to the legal regulator for failing to co-operate fully with its investigation into his financial books.
In a decision rendered Thursday, Law Society Tribunal adjudicator Raj Anand noted that it took five formal requests by law society investigators over several months for Diamond to hand over documents concerning his referral fee operation dating to October 2013.
“The law society has demonstrated a failure to co-operate by the respondent, who thereby breached his obligations as a licensee,” Anand wrote.
Jordan Whelan, a spokesperson for Diamond and Diamond Lawyers and president of public relations agency Grey Smoke Media, told the Star Thursday night that “after consulting with counsel, we will be appealing the decision.”
Diamond has been under investigation by the law society since October 2016 for allegations including “failing to adequately inform clients” about referral fees and “engaging in improper/misleading advertising,” according to documents filed as part of his disciplinary hearing in July. A spokesperson for the law society told the Star the lawyer remains under investigation despite Thursday’s ruling.
Lawyers in Ontario are self-regulated and must produce financial records to the law society when asked.
In his ruling, Anand recounted much of the law society’s correspondence with Diamond and his lawyers over more than five months, including a letter from Diamond’s lawyer last November that stated that Diamond did not have a trust account, and that referral fees, including “upfront fees,” were deposited into his professional corporation’s general account and that the firm “does not have trust receipt journals, general receipt journals, fees book or client trust ledgers per se.”
Law society bylaws state that lawyers must maintain records showing all money received, including the date the money came in, how it came in and who it came from.
“In my view, as a matter of common sense, it was difficult to believe that Mr. Diamond’s professional corporation did not keep records of each referral fee that it received,” Anand wrote.
In December, a Star investigation revealed that Diamond’s firm had for many years been attracting thousands of would-be clients and then referring them out to other lawyers for sometimes hefty fees. Former clients the Star spoke to said they were often unaware they had been referred out, or that a fee had been paid. Diamond & Diamond has told the Star it has a growing roster of in-house lawyers to handle cases.
Anand credited Diamond with expressing his willingness to co-oper- ate with investigators and the fact that he did not challenge the law society’s authority to request the information it was seeking.
However, it wasn’t until July 2017 when two forensic auditors with the law society met with Diamond and his bookkeeper that investigators concluded the firm did maintain records that contained information required for general receipts and disbursements journals.
“In my view . . . Mr. Diamond knew or should have known of the contents of the bylaw and his obligation to comply with it. He knew from the outset that the law society was investigating the referral process and the source, calculation and amount of referral fees he was collecting,” Anand wrote.
“The sequence of requests and responses represented a ‘cat and mouse game’ that has no place in the relationship between licensees and regulator.”